Obama and Civic Idealism

Imagine a president, or a presidential candidate, taking on Wall Street in blunt language such as this: “We have been dreading all along the time when the combined power of high finance would be greater than the power of the government. Have we come to a time when the president of the United States or any man who wishes to be the president must doff his cap in the presence of this high finance, and say, ‘You are our inevitable master, but we will see how we can make the best of it’?”

Or this: “The supreme political task of our day is to drive the special interests out of our public life.”

Or this: “Through new uses of corporations, banks, and securities,” a privileged economic elite has “reached out for control over government itself,” rendering political equality “meaningless in the face of economic inequality. A small group [has] concentrated into their own hands an almost complete control over other people’s property, other people’s money, other people’s labor—other people’s lives.”

Today, mainstream commentators and editorial writers would disparage such talk as irresponsible populist rhetoric. But American political leaders have not always been as deferential toward economic power as they are expected to be today. The statements quoted above were not made by far-out radicals, but by Woodrow Wilson (1912), Theodore Roosevelt (1910), and Franklin D. Roosevelt (1936).

It is striking to notice the difference between their liberalism and ours. For these icons of twentieth-century liberalism, the first question of politics was how to subject economic power to democratic control.
When Louis D. Brandeis spoke of “the curse of bigness,” he meant that monopolies and big banks posed a danger to democracy. Today, we still worry about bigness, but not in the same way. When we say that Citigroup, Bank of America, Goldman Sachs, and AIG are “too big to fail,” we mean that their failure would wreak havoc with the economy, so the government must bail them out rather than let them go down. The problem with having banks that are too big to fail is that it violates the rules of the capitalist game. When times are good, they make outsized profits, but when things go badly, the taxpayer has to pick up the tab.

But Brandeis had a different worry. For him, the “curse of bigness” was not about systemic risk in financial markets; it was about democracy itself. If corporations, trusts, and banks had too much power, he argued, they would control the government and deprive ordinary citizens of a meaningful voice in political affairs. This fundamental idea was central to the liberalism of Theodore Roosevelt, Wilson, and FDR. As a result, from the Progressive era to the New Deal, liberals debated how best to assert democratic control over economic power.

During the second half of the twentieth century, the focus of liberalism changed. Liberals stopped regarding bigness as a curse, and they made their peace with concentrated economic power. The agenda of postwar American liberalism was set out by FDR in 1944, when he called for an “economic bill of rights.” True individual freedom required more than the political rights enumerated in the Constitution, he argued. Under modern conditions, it also required basic social and economic rights, including “the right to a useful and remunerative job…the right of every family to a decent home, the right to adequate medical care…the right to adequate protection from the economic fears of old age, sickness, accident, and unemployment” and “the right to a good education.”

Unlike the anti-bigness liberalism of the progressive era and early New Deal, the social-welfare liberalism of FDR in 1944 is recognizable as the liberalism of our time. The great liberal causes of the 1950s, ‘60s, and ‘70s—civil rights, Medicare and Medicaid, racial and gender equality, federal support for education, a more generous welfare state—were about using government to provide equal opportunity and a social safety net, not about using government to rein in the political influence of big banks and corporations.

Social-welfare liberalism seems a more practical doctrine than the anti-bigness version of earlier progressives. It is hard to imagine how to break up the large financial institutions and corporations that dominate modern economic life. And yet I believe it’s a mistake for contemporary liberals to give up on the old progressive project of exerting democratic control over economic institutions. In fact, it’s a mistake that has backfired on the Obama presidency. The initial reluctance of Barack Obama and his economic advisers to take a tougher line on the banks has led to a populist backlash that now threatens his agenda.

To see how we reached this point, recall the terms of political debate from the New Deal to the Great Society. Conservatives such as Milton Friedman, Barry Goldwater, and Ronald Reagan opposed welfare-state liberalism on the grounds that it led to big government and undermined individual freedom. They identified government with coercion, and markets with freedom. Liberals replied that market relations are not necessarily free, since many participants in the marketplace lack the education, skills, and resources to compete on a level playing field. And so, for several decades, the argument went. Liberals wanted a greater role for government, conservatives less. In this respect, welfare-state liberalism was consistent with that of the old progressives. But in another respect, the terms of political argument had subtly changed. Conservative opponents of the welfare state had become the critics of bigness, and liberals the defenders of it.

This shift changed the shape of American politics. In moments when Americans feel disempowered, victims of forces beyond their control, conservatives have become more adept than liberals at tapping the mood of populist anger and frustration—even while siding with corporate and financial interests.
Consider this: Which American presidential candidate called for “an end to giantism, for a return to the human scale—the scale that human beings can understand and cope with…the locally owned factory, the small businessman, who personally deals with his customers and stands behind his product, the farm and consumer cooperative, the town or neighborhood bank that invests in the community, the union local”?

The words could have been spoken by Brandeis or Woodrow Wilson. But that was Ronald Reagan, campaigning for president in 1976.

When Reagan took office in 1981, he declared victory over the liberal faith: “Government is not the solution to our problem; government is the problem.” Although Democrats recaptured the White House in 1992, social-welfare liberalism was in retreat. Bill Clinton campaigned to “end welfare as we know it,” and made good on the promise. But he tried and failed to pass universal health care, and, in his 1996 State of the Union address, conceded that “the era of big government is over.”

By the end of the twentieth century, liberalism had lost its capacity to inspire. Having long since abandoned the old progressive project of calling economic power to democratic account, it was unable to address Americans’ sense of disempowerment or to arouse their civic idealism. In the wake of the Reagan years, even the goal of creating a more generous welfare state had stalled. At a time of market triumphalism, it was hard to recall the point of old battles between democratic government and high finance. Before leaving office, Clinton signed into law a bipartisan bill deregulating the financial industry.

Which brings us to Obama. In his 2008 campaign, Obama did not offer a new definition of liberal or progressive politics. But he did succeed in stirring a civic idealism and hope not seen in American politics since the short-lived campaign of Robert F. Kennedy in 1968. Obama’s capacity to inspire was more than a measure of his rhetorical gifts. He galvanized the electorate because he articulated a politics of moral and civic aspiration that went beyond the policy-driven, technocratic politics to which recent Democratic candidates had been prone.

Obama departed from the liberalism of his day in two respects. First, liberals in recent decades have been wary of moral and spiritual discourse in politics, seeing it as a recipe for intolerance and coercion. But Obama rightly argued that, from the abolitionists to Dorothy Day to Martin Luther King, reformers have long brought moral and religious themes to bear in politics; it was folly for progressives to desist from moral and spiritual language, and to cede to the religious right the most potent sources of political argument.
Second, thanks to his background as a community organizer, Obama brought to his campaign a civic sensibility that recalled an older tradition of political reform. According to this tradition, democratic politics is not only about policies and legislation; it’s about mobilizing citizens to claim a meaningful voice in self-government. It requires solidarity among the participants—in neighborhoods, congregations, unions, and other local settings—and usually involves a struggle with entrenched economic interests. For a time at least, the Obama campaign mobilized a movement for change.

In his first year in office, Obama found it difficult to translate the civic energy and idealism he inspired as a candidate into a new progressive vision or a distinctive way of governing. Faced with the exigencies of the financial crisis, he appointed economic advisors whose views had more in common with Wall Street bankers and hedge fund managers than with Brandeis, Wilson, and FDR; some had even promoted the deregulation that led to the crisis. When bailouts and bonuses prompted widespread public outrage, his administration treated populist anger as a force to be placated and contained rather than as a legitimate response to the unaccountable power amassed by the financial industry, and the easy terms on which the government had bailed it out.
To his credit, Obama pressed ahead with the attempt to achieve universal health care—the biggest piece of unfinished business of postwar American liberalism. But the effort was stymied by two forces that the old, anti-bigness progressives would have understood: first, the power of the insurance and pharmaceutical industries; and second, populist backlash and lingering anger over the bailout.

The Tea Party movement that rallied against Obama’s health-care reform was about more than health care. It was a protest against big government, the bailout, and a political system that ignores the concerns of ordinary people. Liberals, committed to greater opportunity for people of modest means, find it perverse that populist anger be directed against health-care reform and big government, rather than against Wall Street and the insurance companies. But when liberalism gave up on the project of holding economic power to democratic account, it opened itself up to this paradox.

In January 2010, a year after Obama took office, he was confronted with two events that should prompt Democrats to reconnect with the populist legacy they’ve ignored in recent decades. One was the election of Scott Brown, a little-known Massachusetts Republican who drives a pickup truck, to the U.S. Senate seat long held by Edward Kennedy. The other was a 5-4 decision by the U.S. Supreme Court that struck down long-standing restrictions on campaign contributions by corporations.

Brown’s election shows that, if Democrats fail to stand up to Wall Street banks and powerful corporations, populist anger will take big government, not big business, as its target. And the Supreme Court decision shows that, unless we find another way to finance campaigns, corporate power will loom even larger than it does now in American politics.

As news of the Republican’s surge in Massachusetts reached the White House, Obama promised to take a tougher line on Wall Street banks, endorsing a proposal by Paul Volcker, former chairman of the Federal Reserve and an outside adviser, to reinstate some of the restrictions on banks that had been enacted in the 1930s and repealed in the late 1990s. “I welcome constructive input from folks in the financial sector,” the president said. But so far, all he’d seen was “an army of industry lobbyists from Wall Street descending on Capitol Hill” to block regulatory reform. “If these folks want a fight,” he added gamely, “it’s a fight I’m ready to have.”

The success of his presidency now depends on reviving the civic idealism his campaign inspired and mobilizing it to bring economic power to account. Obama has spoken of the unfinished work of America’s experiment in self-government. The financial crisis he inherited can be an occasion to reassert democratic control over the economic forces that govern our lives. If Obama can rise to that challenge, he will reshape the political landscape and redefine the meaning of liberalism in our time.

The standard narrative, at this point, is this: Fourteen months ago, the progressive breast swelled with joy and hope at Barack Obama's ascent to power; today, much of that hope is lost, and the fault sits squarely on the shoulders...

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Michael Sandelteaches political philosophy at Harvard University, and is the author, most recently, of What Money Can’t Buy: The Moral Limits of Markets. Portions of this essay were adapted from a commentary originally published by Project Syndicate.